USDT/TRY on Exchanges and IRL

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I was having a chat with a friend of mine about USDT when I realised this, so here is a post about it since I find it really interesting.

You might be looking at these two photos and wondering... what's the difference? If you have already spotted it and have an idea on what I am about to say, awesome. If not, strap in. It's going to get quite fun.

As you may or may not know, the Turkish Lira has been in a relatively precarious position for the past few months (if not more) being drastically affected by Coronavirus when it started spreading worldwide in 2020, causing the Turkish Lira to immediately plummet due to various factors that contribute heavily to Turkish economy failing miserably. (Overall impact on exports, pretty much no tourism, big corporations such as Turkish Airlines unable to operate)

Even after the sudden interest hike to 19% -- CB (Central Bank) governor changing several times throughout 2020 and 2021, various diplomatic issues with all countries... Turkish Lira lost its value once again and is trading at about 8.5 TRY per USD these days.

Even in Turkey itself, the citizens do not really trust Turkish Lira, and to prevent citizens from "selling" their Turkish Liras for any foreign currencies, such as US Dollar or Euro, the government has implemented several things.

Here is a short list.

  • Maximum daily amount of USD a person can purchase. (Unless you are a corporation (which then you are subject to extra taxes) you can't buy more than X USD per day)
  • Tax on the USD you are purchasing (i.e. if you buy 10000 USD, you must pay 20 USD in tax (might be a bit higher))
  • Severely overpriced market rates (banks charge you 8.6 TL for 1 USD when you are trying to buy and 8.35-8.4 TL for 1 USD when you're trying to sell)

The solution? USDT.

Currently, crypto trades in Turkey, interestingly enough, are NOT taxed. This means there is an alternative way to easily exchange currencies with no government fee or monitoring and no inflated bank rates.

Send your TRY to major exchanges > Sell TRY for USDT > You get USDT > Your fiat portfolio doesn't lose value every day now!

However, as one of the major crypto enthusiasts in Europe, Turkish citizens demanded USDT. Heavily. Especially in the last few weeks. So the result... USDT went off the peg.

We all know that USDT should be $1 at all times or equivalent value for foreign currencies. 1 USDT = 0.82 EUR and so forth.

At one point, the demand on Binance (and other exchanges as well) for USDT was so high, that USDT/TRY pair had reached 8.78 TRY per USD at one point, at the same time when IRL markets (worldwide) were trading for around 8.49 TRY per USD. And it takes arbitragers HOURS if not days to balance it out.

It's crazy, yet so easy. A perfect example of "food for thought".

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